Kwambio Fails to Pay Employees, Shuts Down A.D.A.M. Bone 3D Printing Project
The tech industry is rife with tales of unicorns, vaporware, and other fanciful terms for the mysterious world of business. Due to its hype value, 3D printing is particularly filled with startups that promise a lot and deliver little. Ukrainian company Kwambio may or may not fit into this pattern, as its great deal of flashy marketing now stands in stark contrast to what has been happening internally with the firm since early 2020, according to AIN.UA.
The Ukrainian news site has uncovered financial issues at Kwambio that do not bode well for its future. The company has not been operating since March, leading to late paychecks to its employees for most of 2020. Staff says that it hasn’t been paid at all since September 2020. According to AIN.UA, management is aiming to “raise a new round of investment, relaunch the production, and pay off debts.”
Launched in 2014, Kwambio began as a marketplace for 3D printed models, including trinkets and home décor items. After receiving significant investments, it went on to launch its own 3D printer in 2015 and then a lab dedicated to 3D printing ceramics and metals, driving further investments. It previewed a ceramics 3D printer at CES in 2018 and two more at CES 2019. Crunchbase lists the Ukrainian firm as having raised a total of $3.5 million from seven investors.
In 2019, its growth continued with the launch of A.D.A.M. Company, a spin-off geared toward 3D printing implantable human bone, which was already promising from a U.S. Food and Drug Administration perspective. In a press release from January 4, 2021, however, it has been announced that that endeavor has been shut down, reflecting the financial issues of Kwambio at large.
An anonymous employee, who worked at Kwambio from 2014 to 2017, told AIN.UA that, despite the work he put into the company, the financial situation of the firm was untenable. They were able to develop quickly, but payment would be late or provided only in part. At the time that he quit, there were 15 employees at the startup and he believes that no one from the original Kwambio team is still with the company.
Since that source left the firm in spring 2017, Kwambio was able to pick up more funding, with Alex Bart joining and purportedly unaware of the payment issues. Bart is the founder of Empire State Capital Partners, which boasts only Kwambio as a client.
Other employees who jumped on board in 2017 claimed that there were no issues with pay until about August 2019, when payments were at first delayed, and then ceased arriving at all. When one never received her backpay upon quitting, she took the company to court. She said that the company was being run by former Kwambio CFO Andriy Rozov at the time, while Dmytro Skomorokhov was in the U.S. running the branch located there.
“I respected the company management, namely Volodymyr Usov, and so, was getting by with just promises to pay me for several months, but then, to my deepest regret, I saw that taking legal action was the only way out,” the disgruntled former employee told AIN.UA. “Following which, I received threats saying that if I filed a suit, they would drag the trial out and make my life a misery.”
Payment issues were confirmed with other staff members, including one who said he was receiving delayed payments at half the due amount after October 2019. In January 2020, he was no longer paid at all. Despite news of upcoming layoffs, the team continued to work until quarantine was established.
One former staff member told the Ukrainian news site that, on top of everything, there was a matter involving shell companies:
“Several months after the delay, I wrote quite an extensive discontented message to the general chat room, after which Rozov offered to talk on the phone and explain the situation first-hand,” he told AIN.UA. “On the call, I was told that the money had been coming in not straight from the investors, but through some cash-out shell companies, and the cash-outers had allegedly stolen the money.” AIN.UA says that it maintains a record of this call.
In all of this time, the Kwambio printer never made it to market. Staff members say that it was almost ready to be released, with only about three to six months of work needed to get it out to the public.
Meanwhile, in November 2019, Kwambio’s founder, Volodymyr Usov, left to become the Head of the State Space Agency of Ukraine as the agency’s youngest candidate. Usov made it to the final stage of the competition just as a corruption case was initiated regarding a digital publishing company he had established in 2011 called Gutenbergz.
In a press release about the closure of A.D.A.M., that startup’s CEO, Denys Gurak, said:
“The management of the company and the A.D.A.M. startup failed to implement the tasks and reach the goals, which were set by themselves, and which they promised to fulfill. After almost two years, we don’t even have a ready-made prototype of the products. We were also hindered by the situation that has developed with the appearance of COVID-19 in the world, debts, and numerous lawsuits from former employees and investors in Ukraine and the USA. In recent months, A.D.A.M. management has been looking for additional sources of investment and wanted to attract new investors. The company moved to the Technology Incubation Program (TIP) facilities at the University of Connecticut (Farmington, CT), but it couldn’t solve all the problems in the field of funding. We had several meetings with potential investors, but we were unable to convince them to invest in our development at the initial stage. Therefore, we decided to close our startup.”
The AIN.UA story goes into much greater depth, discussing more about Gutenbergz and the investigation’s impact on Kwambio, as well as how the quarantine affected the startup. However, it seems that even without the pandemic, the company was in trouble. Nevertheless, the company has continued investment negotiations. It claims that it will pay back its debts, including back wages to employees. It also has pre-orders for printers that were secured with 10% deposits.